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C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 003290 
 
C O R R E C T E D  C O P Y  PARA MARKINGS 
 
SIPDIS 
 
STATE FOR E, EAP, EAP/CM 
STATE FOR EEB/TPP WCRAFT, CLAYTON HAYS, HHELM 
STATE FOR H/BETSY FITZGERALD, EAP/CM SHAWN FLATT,SCA/RA 
JOHN SIPLSBURY 
STATE PASS USTR FOR DMARANTIS, TREIF, TIM STRATFORD, ANN 
MAIN, JEAN GRIER 
DOC FOR IRA KASOFF, NICOLE MELCHER (5130), MAC (4420), IA 
CSHOWERS (5120) 
TREASURY FOR OASIA/DOHNER/WINSHIP 
GENEVA PASS USTR 
NSC FOR JLOI,DBELL 
 
E.O. 12958: DECL: 12/10/2019 
TAGS: ETRD EFIN ECON PREL WTRO CH
SUBJECT: DIALOGUE ON TRADE REMEDIES: USTR GENERAL COUNSEL 
MEETS MOFCOM VM ZHONG SHAN 
 
REF: BEIJING 2630 
 
BEIJING 00003290  001.3 OF 002 
 
 
Classified By: This message classified by Econ Minister Counselor 
William Weinstein for reasons 1.4 (b), (d) and (e). 
 
THIS MESSAGE IS CONFIDENTIAL. 
 
U.S. DELEGATION: 
USTR GENERAL COUNSEL TIM REIF 
USTR CHIEF COUNSEL CLAIRE READE 
AUSTR TIM STRATFORD 
MINISTER COUNSELOR FOR TRADE CHRISTOPHER ADAMS 
MINISTER COUNSELOR FOR ECONOMIC AFFAIRS WILLIAM WEINSTEIN 
IMPORT ADMINISTRATION SENIOR OFFICER LISA WANG 
ECONOMIC EXTERNAL DEPUTY UNIT CHIEF MELISSA HORWITZ 
IMPORT ADMINISTRATION OFFICER DAMIAN FELTON 
 
PRC MINISTRY OF COMMERCE DELEGATION: 
VICE MINISTER ZHONG SHAN 
DIRECTOR GENERAL, DEPARTMENT OF AMERICAN AND OCEANIC AFFAIRS, 
HE NING 
DIRECTOR GENERAL, BUREAU OF FAIR TRADE FOR IMPORTS AND 
EXPORTS, ZHOU XIAOYAN 
DEPUTY DIRECTOR GENERAL, DEPARTMENT OF TREATY AND LAW, LI 
CHENGGANG 
DEPUTY DIRECTOR GENERAL, DEPARTMENT OF FOREIGN TRADE, SUN 
JIWEN 
DEPUTY DIRECTOR GENERAL, DEPARTMENT OF MECHANIC, ELECTRONIC 
AND HI-TECH INDUSTRY, ZHOU SHIJIE 
DEPUTY ADMINISTRATOR, BUREAU OF FAIR TRADE FOR IMPORTS AND 
EXPORTS, LIU DANYANG 
 
1.(C)  SUMMARY:  In a candid and constructive exchange on 
December 8, General Counsel to the U.S. Trade Representative 
Tim Reif raised the legal context and underpinning of trade 
remedies in a meeting with Chinese Vice Minister of Commerce 
ZHONG Shan. Reif said that the USG has sharp concerns about 
the transparency and validity of three recent investigations 
of U.S. exports to China (steel, chicken and autos). Zhong 
repeatedly claimed that the PRC would drop any investigation 
if the U.S. provided sufficient and convincing evidence. 
Zhong underscored the PRC's main principles of abiding by 
domestic law and WTO rules. Reif said that both governments 
need to remain focused on the basic rules and requirements of 
the WTO in the application of trade remedies in order to 
maintain confidence in the international trading system. The 
two sides agreed to continue a technical dialogue on trade 
remedies at the Trade Remedies Working Group to be held in 
late January in Washington. END SUMMARY. 
 
2.(C)  Reif discussed the critical role trade remedies play in 
international trade, contending not only that remedies have 
been a fundamental part of the rights and obligations of 
trading parties since Article 6 of the General Agreement on 
Trade and Tariffs (GATT) went into effect in 1947, but also 
that the proper use of trade remedies was very important to 
maintaining confidence in the trade system in the medium and 
long term. 
 
3.(C)  Reif emphasized that the USG prefers to manage the 
application of trade remedies and their underlying causes 
early rather than proceeding toward possible WTO legal 
disputes.  On three current PRC anti-dumping and 
countervailing duty cases against imports of U.S. chicken, 
autos and steel, Reif cautioned that the USG is frustrated by 
the lack of transparency in a) MOFCOM's decision-making 
process on whether to initiate investigations and b) the 
specific allegations of injury or threat of injury caused by 
alleged U.S. dumping or subsidies in these industries. 
 
4.(C)  Reif stated that the facts in these cases show there has 
been no injury to the corresponding Chinese industries and 
that the cases should be dismissed according to Chinese law. 
Reif pointed out that WTO rules on trade remedies require 
proof of a substantial increase in import penetration or 
similar fact patterns. Zhong answered that imports of U.S. 
soybeans to China have increased by more than 35 percent so 
far this year. Zhong also predicted that both countries' use 
 
BEIJING 00003290  002.3 OF 002 
 
 
of trade remedies would not decrease substantially in the 
near future and that their frequency indicated that the 
bilateral trade relationship has real problems.  Following 
this logic, he underscored that if both governments are 
committed to advancing trade, a good mechanism for 
consultations was needed. 
 
5.(C)  Zhong complained about the number and total value of 
trade remedy investigations by the United States against 
Chinese products. Zhong said that so far this year, the U.S. 
has initiated 23 AD-CVD-Safeguard cases against China 
(including the tire case) and 6 cases under section 337, 
which total in value to over seven billion U.S. dollars. 
These cases, he claimed, account for 25 percent of cases and 
60 percent of the value of cases against China this year. 
Reif countered that in 2008, only 16 of the 73 anti-dumping 
cases against China were initiated by the USG.  He cautioned, 
however, that whatever the numbers, both governments need to 
remain focused on the basic rules and requirements of the WTO 
in the application of trade remedies.  Zhong moved 
specifically to the U.S. cases against Chinese exports of 
tires and oil country tubular goods (OCTG), asking for 
evidence of harm before quickly running through a laundry 
list of complaints about bilateral trade (lack of 
market-economy status, a Cold-War era export control regime, 
restrictions on export of military equipment to China). 
 
6.(C)  Zhong again expressed disappointment over the U.S. 
decision on September 11 to use the WTO's special safeguard 
mechanism to apply tariffs against the importation of Chinese 
passenger tires.  Zhong told the U.S. delegation that 
President Obama has the right to reevaluate the tariffs 
against Chinese tires six months after their application and 
asked for news on how that review was shaping up. Reif said 
that although there are some positive signs in the U.S. tire 
industry, that it was impossible to see the impact of the 
tariffs in less than six months.  Assistant USTR Tim 
Stratford informed Zhong that U.S. law does not mandate a 
specific review date and that as time proceeds, the USG would 
remain open to bilateral communication on the issue. 
 
7.(C)  Reif closed the session by stressing the principles that 
should guide the use of trade remedies within the U.S.-China 
trade relationship:  cases must follow the law and the facts 
of the situation and both governments must address underlying 
problems that give rise to trade remedy cases.  Both 
delegations agreed to further discuss trade remedies, 
including working on U.S. concerns about three current 
Chinese CVD investigations, at the January meeting of the 
Joint Commission on Commerce and Trade's (JCCT) Trade 
Remedies Working Group. 
 
8.(C) USTR General Counsel Reif's delegation cleared on this 
message. 
HUNTSMAN